1. Which of the following is True?
a. Inflation makes very little difference to lenders of and investors needing money.
b. For a fully amortizing CPM loan, its amortization is constant overtime.
c. For a fully amortizing CPM loan, its interest payment is increasing overtime.
d. For a fully amortizing CPM loan, its loan balance is reduced only very slightly at first
2. A fully amortizing CPM loan is made for $100,000 at 6.5% interest. If the monthly payments are $1,000 per month, when will the loan be repaid? Assume no prepayment.
a. 144 months
b. 145 months
c. 101 months
d. 100 months
3. A partially amortizing CPM loan is made for $60,000 for a term of 10 years. The borrower and lender agree that a balance of $20,000 will remain and be repaid as lump sum at maturity date. If the interest rate is 7%, what must monthly payments be over the 10-year period?
a. $696.65
b. $581.10
c. $666.67
d. $812.20
4. An interest-only mortgage is made for $80,000 at 10% interest for 10 years. The lender and borrower agree that monthly payments will be constant and will require no loan amortization. What will the monthly payments be? What will be the loan balance after five years?
a. $666.67; 0
b. $8,000; 0
c. $666.67; 80,000
d. $800.00; 80,000
5. A borrower takes out a 30-year fully amortizing CPM loan for $250,000 with an interest rate of 5%. What would the monthly payment be?
a. $1,355
b. $1,342
c. $1,042
d. $694